Judge Questions Redstone's Health -- WSJ
August 09 2018 - 2:02AM
Dow Jones News
By Keach Hagey and Peg Brickley
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 9, 2018).
A Delaware judge said he had concerns about the medical
condition of 95-year-old media mogul Sumner Redstone and declined
to order that he be deposed in the legal battle between his
family's holding company, National Amusements Inc., and CBS
Corp.
Judge Andre Bouchard said Wednesday in Delaware Chancery Court
that he worries that Mr. Redstone might not be aware of what was
being done in his name. The judge struck from the court record
representations of the ailing mogul's responses to questions
related to the case.
"As a practical reality, I have great skepticism" that Mr.
Redstone could engage in the questioning "in a formed, deliberative
way," Judge Bouchard said.
CBS is battling National Amusements and its de facto leader,
Shari Redstone, for control of the media company. The dispute stems
from her desire for CBS and Viacom Inc. to explore a merger against
the wishes of CBS.
CBS in May approved a dividend that would reduce National
Amusements' voting stake from nearly 80% to about 20%. National
Amusements moved to block the dividend by changing CBS's bylaws to
require a 90% supermajority for such a change. A trial in the case
is set for October.
CBS had asked that Mr. Redstone be deposed in the case, or that
any representations in the litigation of his intentions or desires
be discounted.
The judge said he would not order Mr. Redstone to be deposed. He
also ruled that a video shot in January by Mr. Redstone's longtime
friend and CBS director Arnold Kopelson, submitted to the court by
CBS as evidence of what it argued was Mr. Redstone's lack of mental
capacity, wouldn't be made public.
The Wall Street Journal had requested on Monday that the video,
which was submitted under seal, should be made public, arguing that
Mr. Redstone's mental status was of public interest to shareholders
in CBS and Viacom.
The judge refused National Amusements' request to strike the
video from the case record altogether, calling it "highly
probative."
Mr. Redstone's health has deteriorated in recent years to the
point where he has been unable to communicate beyond grunts.
National Amusements' lawyers argued that Mr. Redstone's health
was immaterial because he is just one of seven National Amusements
board members voting on the holding company's decisions. However,
he owns roughly 80% of National Amusements' stock and has the power
to replace all board members.
Judge Bouchard was the judge in a separate legal fight two years
ago between National Amusements and Viacom, which it also controls.
In that case, Viacom executives and directors argued that Mr.
Redstone lacked mental capacity and was being manipulated by his
daughter, Ms. Redstone. Ms. Redstone denied the allegation, and the
parties ultimately settled the litigation, leading to the overhaul
of Viacom's board and management and the rise of Ms. Redstone to
power.
Judge Bouchard said that with respect to Mr. Redstone's
condition, "I have great skepticism that goes back two years."
In a statement, CBS cheered the judge's ruling, saying it was
pleased it will be able to review documents related to the question
of who controls of National Amusements and what it described as
National Amusements' "coup against the Viacom Board in 2016." The
company said it was also pleased the videotape of Mr. Redstone,
while confidential, has been deemed relevant to the case.
National Amusements declined to comment.
At Wednesday's hearing, the judge said he isn't ruling on Mr.
Redstone's mental competence, but he noted that it could be a
central issue in the case.
"Who controls is important as a factual matter and potentially
as a legal matter," he said, adding that when he writes an opinion
in the case, he is going to have to address "who is calling the
shots at NAI."
Write to Keach Hagey at keach.hagey@wsj.com and Peg Brickley at
peg.brickley@wsj.com
(END) Dow Jones Newswires
August 09, 2018 02:47 ET (06:47 GMT)
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